News #99 - Air bongdaso will lose out with retail Red Sea return

Air bongdaso should expect the loss of some consumer and retail goods volumes when ocean shipping resumes in the Red Sea and Suez Canal.

Milena Milenkovic, regional airfreight manager, Benelux, Flexport said that consumer goods and retail goods that are traditionally transported by ocean but moved to air at bongdaso start of bongdaso Red Sea crisis will switch back when passage becomes safe and reliable.

Speaking during a Flexport webinar on 10 February, she said: “If bongdaso Suez Canal opens I do expect that certain volumes – mainly fast moving consumer goods and retail – will go back to ocean because when bongdaso navigation is more reliable in ocean there will be no reason for these companies to ship by air again.”

However, Milenkovic said it’s possible that ocean shipping in its regular form won’t return to bongdaso Red Sea this year due to bongdaso complexity of bongdaso geo-political situation.

“Yes, there is a ceasefire but there is still a lot to be solved (in bongdaso region),” she stressed during Flexport’s ‘Scenario Planning: 3 Developments Shaping bongdaso Freight Market’ webinar.

Following bongdaso start of bongdaso Red Sea crisis and rerouting of ships from bongdaso Suez Canal to bongdaso Cape of Good Hope, some shippers and forwarders invested in airfreight capacity in a bid to fulfil orders without delays.

While, there are different schools of thought about how much business Red Sea disruption has generated for the air bongdaso industry, many agree that sea-air shipment options have been well utilised.

Certain countries such as India, Singapore, Sri Lanka, Korea and others “became quite big hubs for sea-air…once bongdaso Suez Canal got closed”, said Milenkovic.

She added that bongdaso popularity of bongdaso model is down to it being “much more economical than air, just a little bit more expensive than ocean”.

Red Sea scenarios

There are several scenarios that could play out with bongdaso introduction of shipping back to bongdaso Red Sea and Suez Canal, according to Flexport’s research.

Guillaume Caill, head of ocean, EMEA, Flexport said bongdaso most likely (45% chance) scenario is a “bandwagon” effect where carriers all switch back simultaneously, driven by market leaders signalling confidence, peer pressure and competitive advantage.

“We would see volatility,” Caill said. In bongdaso short term a surge in price would be expected, while in bongdaso long term there would be more capacity putting pressure on rates.

But carriers could also adopt different strategies and there could be a gradual return to bongdaso Suez Canal (30% chance), or bongdaso Red Sea could stay closed, although this is unlikely (25% chance), believes Flexport.

Shipping lines have reacted with extreme caution so far and most are in a “wait and see” mode to see how bongdaso ceasefire will play out before allowing ships to operate in bongdaso Red Sea, said Caill.

If bongdaso situation remains stable and carriers do return to bongdaso Red Sea “then we will likely see overcapacity kicking in again” with “rates under pressure”, he said.

There will also likely be port congestion with container flow disrupted and “a problem with empty container availability back to Asia”.

In a live poll during bongdaso webinar, most participants said Red Sea shipping would likely return in late 2025.

Sanne Manders president, Flexport noted that bongdaso time of year will make a difference as to bongdaso impact on ocean as bongdaso closer to bongdaso peak season bongdaso more disruption, but stressed we should expect Red Sea shipping to return at some point when bongdaso route is safe because it’s a “better product at a lower rate”, compared to shipping through bongdaso Cape of Good Hope.

Whether or not there will be more opportunities for airfreight, it’s likely too early to speculate.

Source: https://www.aircargonews.net/supply-chains/air-bongdaso-will-lose-out-with-retail-red-sea-return/1079679.article

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